Titan Machinery Inc. Announces Results for Fiscal Second Quarter Ended July 31, 2025 (Form 8-K)

Titan Machinery Inc. Announces Results for Fiscal Second Quarter Ended July 31, 2025

- Reiterates $100 Million Inventory Reduction Target for Fiscal 2026 -

- Updates Modeling Assumptions for Fiscal 2026 -

West Fargo, ND - August 28, 2025 - Titan Machinery Inc. (Nasdaq: TITN) ("Titan" or the "Company"), a leading network of full-service agricultural and construction equipment stores, today reported financial results for the fiscal second quarter ended July 31, 2025.

"We produced solid second quarter results amid a challenging market environment, and remain focused on the execution of our operational plan to optimize inventory, ensuring we are in an improved position exiting this fiscal year," stated Bryan Knutson, Titan Machinery's President and Chief Executive Officer. "While we experienced a modest increase in inventory during the second quarter, our inventory levels have remained relatively consistent through the first half of the year, and in line with our previously communicated expectations. The quarterly increase was largely due to timing of OEM shipments ahead of deliveries to our end customers in the second half of this fiscal year. We are on track with our inventory reduction strategy, and we are positioned to exceed our initial $100 million target for the full year, with the majority of that progress still expected toward the end of the fiscal year. Importantly, our parts and service businesses continue to provide stability during this trough in the equipment cycle, as we remain focused on delivering best-in-class service and support for our customers."

Fiscal 2026 Second Quarter Results

Consolidated Results

For the second quarter of fiscal 2026, revenue was $546.4 million compared to $633.7 million in the second quarter last year. Equipment revenue was $376.3 million for the second quarter of fiscal 2026, compared to $465.2 million in the second quarter last year. Parts revenue was $109.2 million for the second quarter of fiscal 2026, compared to $109.8 million in the second quarter last year. Service revenue was $48.8 million for the second quarter of fiscal 2026, compared to $47.3 million in the second quarter last year. Rental and other revenue was $12.1 million for the second quarter of fiscal 2026, compared to $11.4 million in the second quarter last year.

Gross profit for the second quarter of fiscal 2026 was $93.6 million, compared to $112.4 million in the second quarter last year. The Company's gross profit margin was 17.1% in the second quarter of fiscal 2026, compared to 17.7% in the second quarter last year. The year-over-year decrease in gross profit margin was primarily due to lower equipment margins, driven by softer retail demand and the Company's initiatives to manage inventory to targeted levels.

Operating expenses were $92.7 million for the second quarter of fiscal 2026, compared to $95.2 million in the second quarter last year. The decrease was led by lower variable expenses associated with the year-over-year decline in revenue, as well as management's expense reduction efforts. Operating expense as a percentage of revenue was 17.0% for the second quarter of fiscal 2026, compared to 15.0% of revenue in the second quarter last year.

Floorplan interest expense and other interest expense was $11.5 million in the second quarter of fiscal 2026, compared to $13.0 million for the same period last year. Floorplan interest expense decreased in the second quarter of fiscal 2026 compared to the same period last year due to lower interest-bearing inventory levels.

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In the second quarter of fiscal 2026, net loss was $6.0 million, with loss per diluted share of $0.26, compared to net loss of $4.3 million, with loss per diluted share of $0.19, for the same period last year. Results for the second quarter of fiscal 2025 included a non-cash sale-leaseback financing expense of approximately $8.3 million, or $0.36 per diluted share. Excluding this non-recurring item, adjusted net income for the prior year quarter was $4.0 million, or adjusted earnings per diluted share of $0.17.

EBITDA in the second quarter of fiscal 2026 was $12.4 million, compared to $18.3 million in the second quarter last year.

Segment Results

Agriculture Segment - Revenue for the second quarter of fiscal 2026 was $345.8 million, compared to $424.0 million in the second quarter last year, reflecting a same-store sales decrease of 18.7%. The revenue decrease resulted from a softening of demand for equipment, driven by lower commodity prices and sustained high interest rates, both of which are reducing farmer profitability. Pre-tax loss for the second quarter of fiscal 2026 was $12.3 million, compared to $0.6 million of pre-tax income in the second quarter last year. Included in the results for the second quarter of fiscal 2025 was a $6.1 million non-cash sale-leaseback expense.

Construction Segment - Revenue for the second quarter of fiscal 2026 was $72.0 million, compared to $80.2 million in the second quarter last year, reflecting a same-store sales decrease of 10.2%. The decrease was driven by lower equipment sales. Pre-tax loss for the second quarter of fiscal 2026 was $1.2 million, compared to pre-tax loss of $4.9 million in the second quarter last year. Included in the results for the second quarter of fiscal 2025 was a $5.1 million non-cash sale-leaseback expense.

Europe Segment - Revenue for the second quarter of fiscal 2026 was $98.1 million, compared to $68.1 million in the second quarter last year, which includes a $4.1 million positive impact related to foreign currency fluctuations. Net of the effect of these foreign currency fluctuations, revenue increased $25.9 million, or 38.1%, largely driven by European Union stimulus programs in Romania. Pre-tax income for the second quarter of fiscal 2026 was $5.1 million, compared to pre-tax loss of $2.3 million in the second quarter last year.

Australia Segment - Revenue for the second quarter of fiscal 2026 was $30.6 million, compared to $61.3 million in the second quarter last year, which includes a $0.9 million negative impact related to foreign currency fluctuations. Net of the effect of these foreign currency fluctuations, revenue decreased $29.8 million or 48.7%. The decrease was driven by the normalization of sprayer deliveries in fiscal 2026 after having caught up on a multi-year backlog of deliveries during fiscal 2025. Pre-tax loss for the second quarter of fiscal 2026 was $2.1 million, compared to pre-tax income of $1.4 million in the second quarter last year.

Balance Sheet and Cash Flow

Cash at the end of the second quarter of fiscal 2026 was $32.7 million. Inventories were flat at $1.1 billion as of July 31, 2025 compared to January 31, 2025. Outstanding floorplan payables were $852.2 million on $1.5 billion total available floorplan and working capital lines of credit as of July 31, 2025, compared to $755.7 million outstanding floorplan payables as of January 31, 2025.

For the six months ended July 31, 2025, the Company's net cash provided by operating activities was $49.9 million, compared to net cash used for operating activities of $47.4 million for the six months ended July 31, 2024. The change in cash from operating activities was primarily attributable to changes in inventory and a changing mix in floorplan financing, which was partially offset by a decrease in net income for the first six months of fiscal 2026 compared to the prior year period.

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Additional Management Commentary

Mr. Knutson continued, "Our proactive approach to optimizing inventory is helping drive equipment sales amid a weak demand backdrop, and this approach requires pricing concessions which are continuing to compress equipment margins. As such, we are adjusting our revenue modeling assumptions and narrowing our adjusted diluted loss per share guidance to a range of ($1.50) to ($2.00). These changes reflect our steadfast commitment to achieving the inventory reduction targets we set for this fiscal year. Our near-term efforts remain focused on ensuring we exit this fiscal year with more optimized levels of inventory so we can reaccelerate the business back toward normalized levels of earnings generation as swiftly as possible."

Fiscal 2026 Modeling Assumptions

The following are the Company's current expectations for fiscal 2026 modeling assumptions:

Previous Assumptions

Current Assumptions

Segment Revenue

Agriculture (1)

Down 20% - Down 25%

Down 15% - Down 20%

Construction

Down 5% - Down 10%

Down 3% - Down 8%

Europe

Up 23% - Up 28%

Up 30% - Up 40%

Australia

Down 20% - Down 25%

Down 20% - Down 25%

Adjusted Diluted Loss Per Share (1)

($1.25) - ($2.00)

($1.50) - ($2.00)

(1) Includes the full year impact of the Farmers Implement and Irrigation acquisition, which closed in May 2025.

Conference Call and Presentation Information

The Company will host a conference call and audio webcast today at 7:30 a.m. Central time (8:30 a.m. Eastern time). Investors interested in participating in the live call can dial (877) 704-4453 from the U.S. International callers can dial (201) 389-0920. A telephone replay will be available approximately two hours after the call concludes and will be available through Thursday, August 28, 2025, by dialing (844) 512-2921 from the U.S., or (412) 317-6671 from international locations, and entering confirmation code 13755311.

A copy of the presentation that will accompany the prepared remarks on the conference call is available on the Company's website under Investor Relations at www.titanmachinery.com. An archive of the audio webcast will be available on the Company's website under Investor Relations at www.titanmachinery.com for 30 days following the audio webcast.

Non-GAAP Financial Measures and Adjusted Net (Loss) Income, Adjusted (Loss) Income before Income Taxes and Adjusted Diluted (Losses) Earnings per Share